Short answer
To understand a life insurance policy, start with the schedule page, which lists the insured, owner, beneficiaries, face amount, premium and policy type, then read the sections on riders, exclusions, cash value and the grace period. An annual statement or in-force illustration shows what the policy is doing now, and a licensed agent can translate the rest.
Key takeaways
- The policy data page lists the owner, insured, face amount, premium and issue date.
- The owner, insured and beneficiary can be different people with different roles.
- Term policies have key deadlines, such as when level premiums end and conversion rights expire.
- On permanent policies, compare guaranteed and non-guaranteed values on statements and illustrations.
- Riders add extra features, and each one has its own rules, costs and end dates.
Start with the policy data page
Near the front of your policy is a page often called the policy data page, schedule page or specifications page. It sums up the key facts in one place, such as the ones listed below. If you only read one page closely, make it this one. Keep it handy whenever you call your insurer.
- Policy number and issue date
- Names of the owner and the insured
- Face amount, also called the death benefit
- Policy type, such as 20-year term or whole life
- Premium amount and how often it is due
Know who is who on the policy
Every policy names an owner, an insured and at least one beneficiary. The owner controls the policy, usually pays the premiums and can change the beneficiaries. The insured is the person the policy covers. The beneficiary receives the death benefit when the insured dies. One person is often both the owner and the insured, though the roles can be split.
Look for the primary beneficiary and any contingent, or backup, beneficiary. The contingent beneficiary receives the money if the primary beneficiary dies first. Check the spelling of each name and make sure your choices still reflect your wishes. A marriage, divorce or death in the family is a good reason to review this section. The owner can usually change beneficiaries with a form from the insurer, though an irrevocable beneficiary must agree to the change.
Learn the main policy provisions
The body of the policy spells out the rules both you and the insurer must follow. The language can feel dense, so focus on the provisions that come up most often. Knowing them now can prevent surprises if you ever miss a payment or your family files a claim.
- Grace period: extra time to pay a late premium before coverage lapses, often 30 or 31 days, and sometimes longer.
- Contestability period: commonly two years, when the insurer can review a claim for misstatements on the application.
- Reinstatement: the rules for restoring a lapsed policy within a set time, which often require back premiums with interest and proof of good health.
- Conversion privilege: on many term policies, the right to switch to permanent coverage without a medical exam.
Check details for term and permanent coverage
If you own term life, find the length of the level premium period and the date it ends. Many term policies can renew after that date, though the premium can climb sharply each year. Also look for a conversion deadline. Many insurers allow conversion only before a certain age or policy year, so mark that date on your calendar.
If you own whole life or universal life, your policy builds cash value. Your annual statement shows the cash value, the surrender value and any loan balance. Universal life statements also list the charges taken out each month. If you request an in-force illustration, which projects future values, read both the guaranteed and the non-guaranteed figures. The non-guaranteed ones depend on future interest rates, charges or dividends.
Review your riders
Riders are optional features attached to your base policy. Some come at no extra cost, and others add to your premium. Each rider has its own rules and end dates, so read the rider pages closely. Here are three common ones.
- Waiver of premium: waives your premiums if you become totally disabled as the rider defines it.
- Accelerated death benefit: lets you receive part of the death benefit early if you become terminally ill or, on some policies, chronically or critically ill.
- Accidental death benefit: pays an extra amount if the insured dies in a covered accident.
How to review your policy step by step
Set aside some quiet time with your policy and your latest statement or premium notice. Work through these steps and note anything that is unclear. Your insurer can answer many questions, and an independent licensed agent can also review the policy with you at no cost.
- Confirm the owner, insured, face amount and premium on the data page.
- Check that each beneficiary's name is correct and matches your wishes.
- Note key dates, such as the end of the level term or a conversion deadline.
- List each rider and what it costs.
- For permanent coverage, compare guaranteed and non-guaranteed values on your statement or illustration.
- Write down your questions and call your insurer for answers.
Frequently asked questions
What is the difference between the policy owner and the insured?
The owner controls the policy. The owner usually pays the premiums, names the beneficiaries and can make changes or cancel the coverage. The insured is the person whose death triggers the payout. They are often the same person. When they differ, such as when one spouse owns a policy on the other, only the owner can make changes.
What does the contestability period mean?
The contestability period is a window, commonly two years from the issue date, when the insurer can review a claim for errors or omissions on the application. If it finds a material misstatement, it may deny the claim or adjust the payout. After the period ends, the insurer has much less room to challenge the policy.
How do I get a copy of my life insurance policy?
Contact your insurer by phone or through its website. The policy owner can usually request a copy of the contract, a recent statement and, for permanent policies, an in-force illustration. Have the policy number ready, or the insured's full name, date of birth and Social Security number.
What is an in-force illustration?
An in-force illustration projects how a permanent policy may perform from today forward. It shows future premiums, cash values and death benefits under both guaranteed and current assumptions. It is especially useful for universal life, where rising costs can cause a policy to lapse sooner than expected. The owner can usually request one from the insurer.
Related guides
- How Life Insurance Cash Value Works
- How to Change the Beneficiary on a Life Insurance Policy
- How to Find a Lost or Forgotten Life Insurance Policy
Have a policy with a specific company? Find your carrier for help with that policy.